When asked what they like in a particular wine, many drinkers either opt for simplistic terms such as dry or sweet—or vague and impressionistic language you'll never find in a sommelier's handbook. Even so, marketing pros think there is valuable intelligence to be gleaned from such responses.
Constellation Brands (STZ), whose brands include Clos du Bois, Ravenswood, and Robert Mondavi, is even using something called "sensory analytics" to help it better understand consumer preferences. That's a fancy term for getting expert tasters to classify wines according to precise descriptions, which are cross-referenced with consumers' impressions to uncover correlations. For example, says Constellation's U.S. chief of marketing, Chris Fehrnstrom, "many consumers deny they like sweet wines" when they actually do. "There is a very strong segment in sweet wines," he says. That insight helped launch Primal Roots, a "silky, jammy" wine now being shipped to stores. Although it won't be touted as such ... it's sweet.
Constellation is the world's second-largest wine seller (after E. & J. Gallo Winery), and it's trying to introduce brand building to an industry unaccustomed to the sophisticated consumer targeting of, say, Procter & Gamble (PG) or Coca-Cola (KO). The wine company hopes to build scale without undermining wine's mystique. "They don't want to look like a giant mass-produced wine company," says JPMorgan Chase (JPM) analyst Neal Rudowitz. "You want to appear authentic."
Until two years ago, Constellation was a collection of four operating units, each concentrating on different wine price segments. The groups had separate marketers, sales forces, and distribution networks. Then Chief Executive Officer Robert Sands consolidated these separate functions into a single entity and dozens of distributors into four. Sands also got out of cheap ($5 and less) wines to focus on varieties that sell for up to $20 a bottle. Meanwhile, North American President Jay Wright aggressively sought younger customers on the Web. Constellation says the changes helped boost sales of its 15 most profitable brands by 10 percent last year. "We're supercharging our investments in brand building," says Wright, a former brand manager at P&G for Duncan Hines cake mixes.
For decades, marketing at Constellation amounted to little more than in-store pitches (Wine Spectator ratings or staff picks) and ads in magazines. Sands last year doubled his digital marketing budget to $10 million and is raising it 50 percent this year. He's convinced online marketing is ideally suited to selling wine because drinkers have long discovered new tastes through real-life social networks. "If anything lends itself to social media, it's wine," he says.
A key target of the online strategy is Millennials, the 21- to 34-year-olds who are now the fastest-growing segment of wine drinkers. In early 2010, Constellation staged a "tweet up" for its Robert Mondavi brand. Bloggers and others were brought in to tour the Napa Valley (Calif.) winery and encouraged to send Twitter posts as they strolled and sipped. Fehrnstrom says the brand's sales surged 29 percent in 2010, though it's unclear the event played a role.
Last June, Constellation recruited digital marketer Karena Breslin from Gallo. Her first move was to set up a class for employees called Digital 101, where she stressed the importance of creating a conversation with online users rather than resorting to a hard sell. "It's not always 100 percent focused on the product and the brand," she says.
Breslin helped shift advertising for Arbor Mist, a sparkling fruit wine in decline, entirely from traditional media to online venues. Her team hired outside creative agencies to help build and market a Facebook page that has since attracted 270,000 fans, making it the most popular wine brand on the social networking site. Mobile and banner advertising helped drive the brand's target consumers, women, to the page, where moderators hosted discussions about romantic comedies and bad haircuts. Bottle sales of Arbor Mist during a two-month online push last summer jumped 20 percent.
Constellation has expanded what it calls Project Genome, which studies the DNA of wine drinkers' buying habits through analysis of shopper behavior and scanned purchases. One finding: Wine buyers spend more on groceries in general than nonquaffers, data that comes in handy when lobbying retailers to add shelf space for wine.
The bottom line: More than 40 percent of Millennials increased wine drinking last year. Constellation has boosted digital marketing 150 percent to reach them.